Monday, May 30, 2005

Los Angeles housing isn't a bubble in the sense that Washington, DC housing is reported to be: in L.A., unlike DC, you can't get appreciably cheaper housing of equivalent quality by renting. Still, the current sales prices in relation to incomes make sense only if people buying now are reckoning on price appreciation, as I did eight years ago....If the financial futures markets were better developed, I could hedge against the risk of a price drop (or long plateau) without physically moving. But the HedgeStreet market is still quite thin, and the financial products promised by the partnership between Robert Shiller's MACRO Securities Research and the Chicago Mercantile Exchange appear to remain, for now, nothing but promises. So I'm heading for the sidelines, putting my money where Brad DeLong's mouth is.

I wonder how 100 year lease-holds in Dubai compare to conventional rental prices in that market.